This report is provided as a status report on the In-lieu Fee for the Undergrounding of Utilities Study Issue. The issue is intended to evaluate the effectiveness of establishing in-lieu fees for undergrounding projects as well as delineating districts where the fees could be used. For the initial phase of this project, staff has begun mapping the City to delineate where undergrounding has occurred and where overhead utilities remain.

Section 19.38.090 of the Sunnyvale Municipal Code establishes current requirements on the undergrounding of utilities. This section requires that "all utilities and communication services associated with new development, redevelopment, subdivision or change in use shall be placed underground". Utilities to be underground include sewer, water, gas and all electric and communication facilities such as telephone, cable television, fiber optics etc. Such undergrounding includes both building service (laterals and service drops) and distribution (boundary) facilities of 34.5 KV or less. Section 19.38.090 also includes a listing of general requirements and exempt facilities.

Section 19.38.100 of the Sunnyvale Municipal Code requires that the developer bear all costs associated with placing utilities underground subject to certain exceptions. Exceptions would include where lines cross a public right-of-way or other private property not controlled by the developer. For example, undergrounding is not required where there are no poles on the subject property. Service drops; however, are required to be relocated underground. Allocated costs for undergrounding of utilities will vary depending upon the situation. The developer may be required to share costs with the City or pay a pro rata share. The current undergrounding ordinance does not incorporate an in-lieu fee provision.

This study issue is intended to consider the development of an in-lieu fee for undergrounding projects as well as delineating districts where fees would be used. In addition, the study would also consider the elimination of conduit installations as an alternative to undergrounding as this requirement has not proven cost effective.

In-lieu fees for the undergrounding of utilities was originally ranked by the City Council in 2000; however, work was deferred that year to focus staff resources on the Large Home Study Issue. For 2001, the energy crisis forced a shift in priorities for certain utility companies limiting their resources to work with City staff. Therefore, work did not begin on this item until spring of 2002.

The Planning Commission considered this item at its hearing of July 8, 2002. No testimony was offered and the Commission made no modification to this report (See Minutes Attachment A).

The following policies and action statements relate to undergrounding issues:

Undergrounding requirements were established within the Sunnyvale Municipal Code in 1975. Since that time, implementation of undergrounding requirements has had mixed success. Larger commercial or industrial projects with long, clearly defined boundaries fronting streets and boulevards have been generally successful in meeting undergrounding requirements. The undergrounding of long sections of overhead utilities have a positive visual affect from which the entire community benefits. Large projects also have the advantage of greater financial resources and the percentage of overall project costs for undergrounding is more manageable.

For smaller projects, particularly single family home development or replacement, undergrounding costs can have a significant financial impact on the project. Such projects are commonly characterized by small property sharing multiple boundaries with its neighbors. Undergrounding projects in such locations generally represent marginal aesthetic improvement and often result in disruption on adjoining property. Finally, small lot undergrounding projects are often difficult to design in that poles, support wires and associated equipment may or may not be present on the subject property. Each case is unique and the developer is only responsible for facilities on their property. In some cases only the wires (conductors) cross the subject property. In such cases, off-site properties are affected but cannot be required to share costs. In such cases, or where facilities cross public right-of-way, the City must participate in project costs. It is sometimes determined that the cost to the City is too great and the project is not completed. All situations where undergrounding is not accomplished as part of project development is an opportunity lost to the community at-large to implement undergrounding policy.

Staff members from the Community Development Department are currently mapping the location of overhead utilities in the City of Sunnyvale at the parcel level. It was hoped that this information could be obtained from the utilities; however, recent discussion with PG&E indicates that the utility considers such information proprietary and cannot be made available for City use. The maps will differentiate between power, telephone and cable service. In addition, the maps will show whether overhead utility services are located in the front or rear of each parcel. This work will establish the base data from which undergrounding options may develop and is expected to be completed by mid-August.

Future options related to the undergrounding of utilities may include identifying business/employment districts or residential neighborhoods where assessment districts might be considered to fund such utilities. Areas of particular aesthetic importance might also be identified as a suitable location for the application of in-lieu funds as they come available. The development of these options must be responsive to legal issues related to the collection, holding and use of any such funds. Future analysis will consider a range of options including in-lieu fees, waiver agreements and deferral agreements.

Future dates have not been set for this study issue to return to the Planning Commission and City Council; however, staff expects to return with analysis of undergrounding options early next year.

This item is an update of a study issue under development; no fiscal impacts will result from this item.

The staff report for this project was posted on the City of Sunnyvale Website and a copy of the report was provided at the reference section of the City of Sunnyvale’s Public Library. The Agenda was posted on the City of Sunnyvale’s Website.

This item is an update on the status of the In-lieu Fee for Undergrounding of Utilities; no specific action is required.

No action required.

Prepared by:
Fred Bell
Principal Planner

Robert Paternoster
Director, Community Development

Approved by:
Robert S. LaSala
City Manager

1. Minutes of Planning Commission hearing of July 8, 2002.